Why HTC, Sony and LG are still in the segment of smartphones?

Competition is fierce in the segment of smartphones. The former referents have become mere comparsas, and companies like HTC, Sony and LG keep your bets year after year despite the reality yells insistently to leave. Do not you gain money, so why so much effort?

That is the question that many pose some manufacturers who have long been trying to regain a position that seems impossible to be recovered. Today only two giants can boast of making money with mobile: Apple and Samsung. Chinese manufacturers are unknown despite its growth, but its market share should convince HTC, Sony or LG to make a decision just taken not mentioned. A withdrawal time, they say, is a victory. There must be some reason for it not be for them.

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The cold and cruel numbers

Numbers do not lie: the segment of smartphones is more competitive than ever and not only traditional manufacturers have had to adapt to the stranglehold of Apple and Samsung: also have had to face the success of Chinese manufacturers.

Xiaomi, Oppo, Huawei, ZTE live or have become true giants in sales especially in China, but the appearance of these competitors has made the relevance of those previously dominated the market has been greatly diminished . The market shares of LG, Lenovo / Motorola, Sony or HTC have only to be reduced in recent times, and that has had a direct effect on their losses terminal and loss rates over prior periods, as shown the table above.

Charles Arthur made a detailed study of the situation in The Overspill, and east -known analyst revealed how the data for Chinese enterprises are largely a mystery. Xiaomi appeared to be the big star two years ago, but in 2015 their sales were not expected and other Chinese manufacturers have managed to exploit those weaknesses.

How long you have to lose money?

As revealed this analyst, the figures make it inevitable question. LG is the most flagrant case: sell 18.5% of the selling Samsung terminals in number but not to lose money. It has done not one, not two, but seven consecutive quarters. It does not matter concerned one of the bravest companies when trying new things: how long can this manufacturer continue to reject reality?

The market has made many of these companies strategy rethink: Sony eg focused its efforts on the middle and high end, but that has not helped much: two months ago and watched as its mobile division continued to sink with a results remarkably poor.

In HTC things are not much better, and that the company has launched its best -with terminal differentiation in recent years and continues also struggling in the middle range, which just introduced its new devices of the Desire family. Microsoft ‘s better not to talk.

The pasta is on the high end: It always has been

One of the most crushing survey data Arthur was his study of the average price of smartphones and how sales growth has been declining more or less steadily since 2011. Emerging markets appeared to be a great opportunity for many manufacturers in the input range they have proved to be so important.

In its conclusions, this analyst reveals that “high – end much saturated ago: people who could buy expensive phones already did, but now there is no new markets to sell to the emerging countries”. So much so that in the United States, China and Western Europe could be not only new sales decelerations: could be reductions in volume according to IDC.

Da like many we justify that nowadays a mid – range terminal is good enough for 99% of the population. That Mid-range is stuck in no man ‘s land and all Android manufacturers have realized that less and less money is earned with these terminals.

Things change when we talk about high – end: this is where the joys for manufacturers who fail to defend their positions come. Profit margins are much higher, and are Apple and Samsung the clear standard bearers in the world iOS and Android respectively. Few can cough up their star devices, and that the high – end devices from other manufacturers comply with all requirements to compete in this segment.

Since neither Sony nor LG or HTC nor others- seem to compete in that market, one would expect that some of them (or all) announced sometime leaving the segment of smartphones. Are too many sacrifices, too many resources, too much time and money invested to see how the benefits they bring other segment is in jeopardy: fewer manufacturers mean that there is less competition , but the truth is that manufacturers cannot be losing money indefinitely.